ITP Techblog

I remember having an argument with a newspaper sales guy way back in the Good Old Days about the arrival of the internet.

You'll remember the newspaper in the good old days - so thick you couldn't fold it on a Wednesday (classified advertising day) and once so chock full of ads for cars the editorial copy had to be left out because there just wasn't enough room.

At Computerworld we used to ebb and flow in terms of pages of editorial because it's all dictated by how many ads you'd sell. In a normal week, 56 pages was not uncommon and we'd gust up to 72 around the Christmas bonanza time - lots of jobs you see.

Then along came Trade Me with this weird concept: you could sell your old tat online to a growing audience and, more importantly, once it was sold your ad would vanish instantly. No more random calls three weeks later about whether that bicycle was still for sale. No more calls at all - you could cheerfully ignore people. Plus you could tell how many were watching your auction. Plus you could answer stupid questions once and move on. Plus, plus, plus.

The sales guy wasn't having a bar of it. No way, he said, would people stop advertising their houses and cars in the paper. No way people would be lugging the internet around with them as they went to open homes. As if.

Fast forward a decade and the sales team have all gone, along with 90% of the newspaper's revenue and quite a bit else besides. There were some real "come to Jesus" moments among the senior management teams and the new era has taken nearly two decades to come around but finally we're starting to see a new world order emerge.

But I'm not here to talk about the media (my wine glass is empty so that's off the cards for now) but instead about what replaced it in terms of advertising. The rise of Adtech.

Adtech promised the very things that newspapers couldn't deliver - an accurate understanding of how your ad was working. You could target the ads at particular demographics, and then watch to see if the results were what you wanted. You could see how many people clicked on your ad (not quite enough, I'm sure) and how many these ad companies thought should click on your ad (a bit more than you're getting) and adjust your spend (upwards) to compensate.

You could test one ad model against another and you could do all of this in real time and the world has not looked back since.

But there's a small catch in this model: a large percentage of it is lies.

The numbers for video viewership was inflated by Facebook in the early days forcing companies to believe video ads were going gangbusters and leading to billions of dollars being spent on ads that nobody was watching (remember autoplay videos? Shudder). Facebook copped a fine (haha, paid out of petty cash) and carried on promoting adtech as the way forward.

Then there are the fake ads - you know the ones. Paul Matthews's likeness used to sell retirement homes in the Yukon and you click on the ad because Paul has a face you know and trust suddenly your money is being syphoned out of your account by someone other than Paul.

Then there are the fake bot accounts that make up a huge percentage of the clicks coming in to your ad. So when you're paying for 10,000 clicks and thinking this is great, qualified leads for my business, you're probably not getting the full weight of your spend, unless you want R2D2 to buy your merino socks.

That's all the obvious and above the line part of adtech's big problem and despite billions being spent by Google and Facebook and others, the ratbags are still out there and continue relatively unmolested. Adtech giants make too much money from them - some estimate as much as US$42 billion in 2019 alone -  to call a halt, so it's onward and upward for the fraudsters.

But there's the other part of adtech that is equally as difficult to love. The part where your demographic data is sold to advertisers without your real understanding or consent.

Because this is a two-sided market and the adtech giants can not only push ads to you, they can also push your data to advertisers, in a way that makes sure they get to clip both tickets (yours as consumer, and the retailers' as advertiser).

So as you potter about the internet, going from social platform to website to retailer to news feed to webmail to video trailer, talking about what you're up to this weekend, what you're worried most about with the upcoming election, how you'd like to buy that new car or the colander you're still researching, the homework you're doing or the work email you're sending, these adtech giants are following your every move and selling that data for a large sum of money. Not a large sum of money every time - far from it, they sell your data cheaply because who cares about you? No, your data is cheap but they sell it millions of times over and so our new adtech giants are billionaires on the back of pennies and micro-transactions.

Last week we talked about how the New Zealand government still supports Facebook by allowing its tracking pixels to be used on government websites and last month we covered how Apple's new iOS feature allows users to decide if they want to share their data or not. In the weeks since the launch, Apple reports that more than 96% of users say they do not want their data tracked.

That's an astonishing figure and one that suggests Facebook and Google will have to seriously rethink their advertising revenue strategy. Because if Apple can do it, users of Google OS devices will want it as well, and if they both provide ad blocking and tracker blocking capability, and the regulators in the EU have their way, the wild west of the adtech world is about to come to a complete halt.